The South African Government's initiative to optimise the economy through the industrial development zones.
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There is a close relationship between the industrial policies pursued by a government, and the nature and pace of the country's developmental path. The impact of industrial policy is important as it effects the social as well as economic development of the country. The South African government has developed an industrial policy as part of an aggressive strategy to position South Africa within the global economy, and stimulate the national economy through export-led growth for sustainable socio-economic development. The Industrial Development Zone (IDZ) Programme is a strategic initiative developed by the South African Department of Trade and Industry to encourage economic growth through export-orientated industry. The IDZs will operate as liberalised duty free and multi-sector development areas, and have been designed to have a simplified business environment with streamlined administrative systems to attract investment and maximise private sector participation in all aspects of zone operations and development. The aim of this is study is two-fold. Firstly to examine the extent to which the IDZ initiative can be expected to stimulate economic growth; and secondly to make recommendations to maximise the operations of the IDZs, which will ultimately add value to the resultant effects in the national economy. An examination of economic industrial location and trade theory has been undertaken and to address the question of whether the location of industry can be a stimulant or an impediment to plans for the involvement of international trade in the strategic development of the national economy. A second consideration is whether the IDZs are a strategically suitable means to achieve these economic objectives. In order to give perspective to this question, the concept of IDZs as they have been applied in other areas of the world (although termed differently in different areas) has been considered, as well as the IDZs as designed and intended for the South Africa. An assessment of the suitability of this initiative involves an evaluation of the extent to which it matches the specific needs of the South African economy. Data on the South African economic situation, patterns and predicted trends has been gathered, The findings of this study, based on the theories and empirical evidence, are: 1) The localisation of industry and supply-side features of the IDZs will create the conditions for the concentrated growth of an export-driven economy. Foreign direct investment and increased production in this sector will boost export and increase international competitiveness. 2) The IDZs can only be effective in meeting economic objectives if they are run with optimal expertise and service levels. The efficient and effective functioning of the IDZs will ensure concentrated growth in the industrial sector aimed at the export market. Specific recommendations are thus made for a private company with relevant experience and expertise to act in the capacity of an IDZ operator to optimise the level of service and operation of the IDZ.